Cermaq ASA : Q4 2012 results acceptable versus challenging market in Americas and Japan

Cermaq reported an EBIT pre fair value and non-recurring items for the fourth quarter of NOK 11 million (NOK 300 million) from high volume growth in feed offset by low salmon prices, especially in Americas and Japan. EBIT pre fair value was NOK 164 million. The full year EBIT pre fair value and non-recurring items was NOK 404 million (NOK 1 369 million). The Board of Directors propose a dividend for 2012 of NOK 1.0 per share, according to Cermaq ASA.

 -  The results in fourth quarter were acceptable taking into account the challenging market in Americas and Japan, says CEO Jon Hindar. Strong growth and performance in EWOS and improved production cost in Mainstream compared to third quarter completes a challenging year for Cermaq. The combined results support our strategy of operating a leading feed company combined with a strong farming business, continues Jon Hindar.

Cermaq's operating revenues were NOK 3 542 million (NOK 3 285 million) in fourth quarter 2012. Revenues in EWOS increased by 16 percent to NOK 2 939 million. Mainstream's revenues were NOK 1 181 million, an increase of 2 percent from higher volumes offset by significantly reduced salmonid prices in the American and Japanese markets. The non-recurring items mainly relate to a bargain purchase gain from the acquisition of Cultivos Marinos Chiloé. 

EWOS sold 330 thousand tonnes of fish feed in fourth quarter 2012, an increase of 9 percent compared to fourth quarter 2011. The growth came from an increase of 13 percent in Norway and 16 percent in Chile. EBIT pre fair value increased to NOK 192 million (NOK 157 million) mainly from high volume growth and strong capacity utilisation.

-  EWOS concludes its best year by delivering strong performance also in fourth quarter. The organisation's competence in product development, purchasing, production and logistics is fundamental for supporting such results. The strong volume growth also demonstrates the recognition from its customers, says Jon Hindar.

Mainstream reported a negative EBIT pre fair value and non-recurring items of NOK 146 million (profit of NOK 157 million) in the quarter. Volumes sold were 46.7 thousand tonnes (41.2 thousand tonnes). The EBIT pre fair value per kilogram, gutted weight, was negative NOK 3.1 (positive NOK 3.8). Cultivos Marinos Chiloé (CMC), which was acquired in October 2012, has been consolidated with effect from fourth quarter. Lower sales price in all markets compared to last year, and decline in Americas and Japan from third quarter 2012, was the main reason for the reduced results. The production cost in fourth quarter was higher than last year, but reduced compared to third quarter 2012 due to improved operational performance.

EBIT pre fair value and non-recurring items per kilogram, gutted weight, for Mainstream Chile was negative NOK 5.3 (positive NOK 7.7), for Mainstream Canada negative NOK 6.2 (positive NOK 0.1) and for Mainstream Norway NOK 1.5 (negative NOK 1.3). Within Norway, Nordland is included with NOK 3.4 (NOK 0.4) and Finnmark negative 0.1 (negative NOK 3.2).

-  The price difference on Atlantic salmon between Europe and Americas has increased further with significant impact for Mainstream's results in Chile and Canada. In this challenging market, I am pleased with the operational performance in all Mainstream companies including the solid integration of Cultivos Marinos Chiloé in Chile, concludes Jon Hindar.

The Board of Directors of Cermaq will propose a dividend for 2012 of NOK 1.0 per share or 40 percent of adjusted net result, amounting to NOK 93 million. Despite the acquisition of CMC and significant expansions in a challenging market, Cermaq's financial position and capacity remain strong with a diversified funding structure and an equity ratio of 47 percent.

The current market situation for Atlantics may continue for some months and put pressure on the profit contribution from Canada and Chile. The existing market imbalance between Europe and Americas is however expected to level out during 2013. Mainstream expects sales volume for 2013 of 150 thousand tonnes, 25 percent up from 2012, due to growth in Mainstream Chile, partly from the recent acquisition of Cultivos Marinos Chiloé.